The Rumors of Ecommerce Death

By Rob Spiegel

Internet retail shopping is alive and well.

As NASDAQ sputters along in dot com shame, a few million dogged Internet consumers have ignored the crash. They continue to happily buy away. The good-news story is not popular with business writers, but Web retailing continues to grow seemingly unaware that the online mall is crashing down around them as they choose garden tools, sell sports cards and order vacation packages. Things aren't perfect. There has been somewhat of a dip since Christmas, but I think most Net retailers can live with a post-holiday. Retailers have weathered after-Santa blues since the English switched from wassailing to kid's toys in the mid-1800s.

We decided to take a look at recent reports on Internet retail sales just to see if the Net stock gloom was blunting the steady expansion of online commerce. We found some softening in the rate of growth, but we certainly didn't find any contraction in consumer behavior. The shrinking effect right now seems limited to the number of dot coms rather then the number of consumers. In fact, if you subtract the bizarrely heightened expectations for the Internet, its growth is coming along just fine. By any standards other than the Net-boom mentality, Internet expansion continues to be fairly spectacular.

Net buyers hit ten quarters of continuous buyingGreenfield Online reported that for 10 consecutive quarters, 60 percent of U.S. Online consumers have made at least one purchase on the Web within a 90-day period. And 28 percent of these shoppers have clicked on Internet ads while shopping. Not surprisingly, those with an annual income of $50,000 and above are more likely to purchase goods (81 percent) than those whose income is below $50,000 (64 percent). Women on the Net buy at a slightly higher rate (74 percent) than men (71 percent). The top categories of goods continues to be books and CDs, followed by clothing, toys and computer software.

Rich buyers seek service basics onlineForrester Research looked at the shopping habits of rich consumers, those with investable assets on $1 million or more, and found that these shoppers are more interested in strong, basic service than they are in virtual exclusivity, extravagance and entertainment. "Affluent shoppers have been buying longer, feel more comfortable buying, buy more frequently and, of course, spend more money," said Ekaterina O. Walsh, a senior analyst at Forrester. "They buy online for the same reasons that all online buyers do and care about price and positive experiences with Web stores." Forrester recommends that sellers of luxury goods should concentrate on purchasing ease and a convenient return process.

Visitor traffic dipsPC Data Online found that traffic to leading ecommerce sites declined about 4 percent in February following an 18 percent seasonal drop in January. Goldman Sachs analysts cited post-holiday seasonality, a slowdown in the rate on new consumer adopting ecommerce and slower overall consumer spending as the factors in the slower month-by-month growth of Internet retailing. However, this year's figures are up 63 percent over last year. Hey. Did anybody see that? I'll say it again. We're up 63 percent over last year! Some blues.

Features that will keep your sales growingConsulting giant PricewaterhouseCoopers released a survey that identified the site features that are most likely to capture sales. The research found that with the exception of search capabilities and close-up product views, most Website features are never used by the majority of Internet shoppers. The search function is overwhelmingly the top feature used by consumers, with 77 percent saying they have used search functions while shopping.

Other site features such as wish-lists and personalization were found to be less important to shoppers. As a side note, we found a study by the International eRetail Association that listed wish-lists as a tool that works well for building loyalty, so go easy on making assumptions based on Internet studies.

The take-away on all of the recent information about Internet retailing is that it continues to grow rapidly in spite of the gloom that fills the business media. To paraphrase Mark Twain, the rumors of the death of retail ecommerce have been greatly exaggerated.

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